How to invest your money in Canadian real estate passively

If you’re considering how to invest your money, Canadian real estate is a top choice among sophisticated investors. Real estate investing is often active in nature. There are three typical types of active investors; those who purchase and tenant properties; speculative buyers who aim to buy low with the hopes of selling high; and those looking to ‘flip’ houses following significant maintenance or renovations.

What is passive real estate investing?

Similar to investing in stocks, bonds, GICs, or even a regular savings account, passive real estate investing occurs when the investors capital is managed by someone else.

Put simply, passive real estate investing requires investing your funds with a company and merely waiting for the return. In essence, rather than being tasked with the research, analysis, and maintenance of investment properties, passive investing is a set and forget approach to real estate investing.

Similar to active real estate investments, there are many different ways to be a passive real estate investor.

What is private lending?

Private lending pairs investors with consumers requiring mortgages. Imagine a consumer, declined by a traditional lender (a bank or credit union), in need of a mortgage.

Companies, like Canadian Lending Inc., match consumers seeking a mortgage (a borrower) with a viable investor or give access to a private lending fund. The consumer receives the necessary funds, and the investor gets a return on their investment.

And, it’s important to note that the investor is secure in the sense that they, or the fund, are registered as a mortgage holder (either a first or second mortgage) on the title.

Why would a consumer use a private lender?

Consumers who are declined by traditional lenders frequently turn to private lenders. Consumers with poor credit history, unsteady income (like self-employed individuals), or those new to Canada are all borrowers likely to face challenges with traditional lenders.

As private lending doesn’t fall under federal regulations, investors are free to loan to borrowers they deem suitable.

As an investor, how do I find a consumer who’s looking for financing?

Ok, so if private lending interests you, sure you could try and source someone needing financing. But, as the saying goes, ‘don’t try this at home.’ Finding a borrower and acting as the lender is incredibly risky. Not only is it crucial to understand the dynamics of real estate, but it’s equally important to understand the details of the borrower.

It’s best to leverage the expertise of a private mortgage company who do the hard work while offering investors strong returns.

The benefits of private lending funds

Passive investing strategies, like private lending, are straightforward; they provide most, if not all, of the rewards, with none of the work.

When choosing how to invest your money, private lending allows you to pass the hard work to the managing company, with you waiting for monthly income payouts.

Here are some of the benefits of private lending:

Real estate secures all investments; this means that should problems arise, the property in question acts as a form of collateral.

Rates of return range between 6 to 18% depending on an investors risk tolerance.

Income payments are paid monthly.

The borrower is responsible for closing costs.

Investments minimums are as little as $25,000.

Our team of experts will scrutinize the property in question including accurate appraisals and the borrower’s circumstances too.

Diversification is possible through multiple loans on various properties (both in their location and their type). Properties could be residential single family, residential high-rise, residential multi-family, multi-family, commercial/office, industrial, land, branded gas stations/hotels/ and agricultural properties.

All CLI’s activities are licensed and insured by the respective licensing boards.

The closing process is handled on your behalf through an external law firm.

How to invest your money: The bottom line

Private lending is among the most simple real estate investment strategies with healthy returns; allowing investors deciding how to invest their money the chance to participate in Canada’s real estate market without the headache of active investing. CLI offers turnkey service which includes sourcing opportunities for investors, underwriting loans in addition to facilitating the closing process.

It’s easier to allow a company with a trusted track record, with a network of analysts and mortgage brokers, and a legal team to determine the best return and associated risk level for your needs. Go ahead and arrange your free consultation today.